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Over $17bn raised from bonds by Nigeria and other African countries – World bank

The World Bank has reported that Nigeria, Kenya, Côte d’Ivoire, and other sub-Saharan African countries raised over $17 billion from bond issuances in 2018.

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Nigeria, others raise over $17bn from bonds, says World Bank

The World Bank has reported that Nigeria, Kenya, Côte d’Ivoire, and other sub-Saharan African countries raised over $17 billion from bond issuances in 2018. This was described as a landmark development by the global development bank.

This information is contained in a report titled “Africa Pulse”, which was produced by the Office of the Chief Economist for the African Region at The World Bank. The report was recently released during The World Bank‘s joint spring meeting with the International Monetary Fund in Washington DC.

During the meeting, The World bank revealed that over $17 billion had been raised from bonds by sub-Saharan African countries. The World Bank and the IMF also warned these countries to be mindful of their increasing debt vulnerabilities.

2018 marked a record year for international bond issuances: According to The World Bank, 2018 marked a record year for international bond issuances in Sub-Saharan Africa. Between 2013 and 2017, countries in the region (excluding upper-middle-income countries) issued, on average, a total of $4.5 billion per year, with an average issuance size of $1 billion.

The World Bank went further to disclose that in 2018, bond issuances totalled more than $17 billion, with the average issuance rising to nearly $3 billion.

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In addition to the increase in issuance volumes, several countries (including Nigeria, Côte d’Ivoire, and Kenya) were able to extend maturities to 30 years.

Nigeria received over $9.5bn for its $2.86bn Eurobond: The Federal Government of Nigeria, in November 2018, said it received a combined offer of over $9.5 billion for its $2.86 billion Eurobond. The bond represents Nigeria’s sixth Eurobond issuance, following issuances in 2011, 2013, two in 2017 and one in early 2018 and its first triple-tranche offering.

In addition, the Ministry of Finance noted that the offer comprised of $1.18 billion seven-year series, $1 billion 12-year series and a $750 million 30-year series.

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It also mentioned that the Government intends to use the proceeds of the bond to fund its fiscal deficit and other financing needs.

Mrs. Zainab Ahmed, the Minister of fiance, also stated during a ministerial briefing at the World Bank/IMF spring meetings that Nigeria will issue N15 billion green bond later in the year after successfully raising N10.92 billion in December 2018.

Nigerian bond market is attractive to investors: According to CBN‘s Godwin Emefiele, Nigeria attracted bonds worth $6 billion after the elections, a sign that the Nigerian bond market remains attractive to investors.

He continued that following the successful conduct of the general elections in February 2019, over $6bn has come into the local bond market, indicating continued confidence in the strength of the Nigerian economy by investors.

He further added that Nigeria’s bond has continued to top the chart due to the stability of the Investors and Exporters’ FX Window rate and the yields being high by emerging-market standards.

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Things might get worse if proceeds are not probably managed: In as much as things are moving on well now for many African countries regarding their bond issuances, The World Bank had warned sub-Saharan African countries of increasing debt levels and its attendant vulnerabilities.

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According to the Africa’s Pulse reports, as of end-2018, nearly half of the countries in sub-Saharan African covered under the Low-Income Country Debt Sustainability Framework were at high risk of debt distress or in debt distress, more than double the number in 2013. In addition, safety margins have decreased in several countries rated as at moderate risk of debt distress.

During the Global Financial Stability Report at the spring meetings, the Financial Counsellor and Director, Monetary and Capital Markets Department, IMF, Tobias Adrian said;

“Nigeria has been borrowing in international markets but we worry. So, on the one hand, that is very good because it allows Nigeria to invest more; but on the other hand, we do worry about rollover risks going forward.

“At the moment, funding conditions in economies such as Nigeria and other sub-Saharan African countries are very favourable but that might change at some point. And there is a risk of rollovers and there is the risk of whether these needs for refinancing can be met in the future.”

The finance minister said there was no cause for alarm, since the country’s total debt profile as of December 31, 2018, stood at N24.387 trillion.

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Economy & Politics

Governors to meet on Wednesday over rising insecurity

The governors of the 36 States of the federation will hold an emergency virtual meeting to discuss growing insecurity in the country.

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Oil Price Crash: Governors to meet on budgetary and economic issues, Insecurity: Governors to meet on Wednesday over rising insecurity

The Nigerian Governors Forum (NGF) has announced that the Governors of the 36 States will hold an emergency virtual meeting to discuss the recent killings and kidnappings by terrorist groups, and agree on a new national security plan to secure the lives of citizens.

This was disclosed in a statement by Head, Media and Public Affairs of the NGF, Mr Abdulrazaque Bello-Barkindo, on Monday in Abuja.

(READ MORE: Labour leaders reportedly walk-out on Ministers over fuel, electricity price hike)

The NGF disclosed in its statement that the Governors would also receive updates on the events following the disbandment of the SARS alongside the rising insecurity.

Other issues that will be discussed by the Governors include:

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  • CACOVID funding palliatives and updates across the states.
  • Joint meetings between the CBN and Kaduna State Governor, Nasir el-Rufai, on accessing pension funds to finance infrastructure development.
  • Updates on the ASUU strike. Issues related to Stamp Duty and the Water Resources Bill will also be discussed at the meeting.

What you should know 

There has been a rise in reported cases of kidnappings and killings by terrorists groups and bandits, especially in Northern Nigeria.

Nairametrics reported earlier that President Muhammadu Buhari had condemned the killing of farmers by Boko Haram on Saturday. The President added that the Federal Government had given the armed forces support to tackle insecurity in the country.

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Economy & Politics

Emefiele tells economists to stop “overdramatizing” analysis that can create Panic

CBN has assured that the nation’s economy will emerge out of recession in the first quarter of 2021.

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CBN health intervention fund gets new interest rate by March 2012, Nigerian banks’ non-performing loans drop significantly by 41% in 2019, External reserves decline by over 8% in 3 months, Nigeria’s external reserves increase by $1.36 billion in 13 days

The Central Bank of Nigeria (CBN) has assured that the nation’s economy will grow by 2% in 2021. The apex bank is optimistic that its various intervention will make Nigeria emerge out of recession in the first quarter of 2021.

This was disclosed by the Governor, CBN, Godwin Emefiele while delivering his keynote address at the 55th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos on Friday.

READ: Total credit to the economy rose to N19.54trillion – CBN Governor

What he is saying

He said, “We expect that growth in 2021 would attain 2.0 percent. It is important to insulate the economy from shocks that may undermine the attainment of the projected 2.0 percent economic growth.

However, downside risks remain, as restoration of full economic activities, particularly in service-related sectors, remains uncertain until a COVID vaccine is produced and made available to millions of people across the world.

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READ: Dark Clouds loom for investors as stocks fall 8% in first half of 2020

“Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices and the financial markets.”

He emphasized on the need to find ways to insulate the economy from the impact of these shocks through diversification efforts, while also working to ensure that the nation adheres to safety protocols in order to prevent a surge in COVID-19 related cases, as this could further cripple economic activities.

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READ: CBN discloses how much has been disbursed from N50 billion COVID-19 intervention fund

Stop overdramatizing analysis

Emefiele appealed to economic analysts to stay clear from analysis that can create panic and thus hamper the economic recovery process. “When you overdramatized you create panic in the system and that slows down the process of recovery.

“Our actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of November 23 & 24, 2020, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices,” he added.

Mr. Emefiele has often accused “armchair” economists of making exaggerated comments when expressing their views on the economy.

Explore Data on the Nairametrics Research Website

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READ: Finance Minister gives reason FG approached China for $17 billion loan

What you need to know

On November 23, 2020, Nairametrics reported that the Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the country will exit recession by the first quarter of 2021 as the government is working towards reversing the declining economic trend in the country.

  • The Finance Minister said the COVID-19-induced recession followed the pattern across the world, where many countries had entered an economic recession.

READ: Nigerian economy going into recession, might contract by -8.9% – Finance Minister

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Economy & Politics

Nigeria edges closer to getting World Bank loan, in the final stages of talk

The Finance Minister has disclosed that Nigeria has fulfilled the conditions and is in the last stages of securing a World Bank loan.

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FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion,IMF, International monetary fund, Zainab Ahmed, Nigeria's Minister of Finance, Budget and National Planning

Nigeria is set to achieve its plans of getting the $1.5 billion World Bank loan package as it is in the closing stages of the deal following its fulfilment of the conditions set by the international multilateral organization.

This disclosure was made by the Minister for Finance, Budget and National Planning, Zainab Ahmed, during an interview on Friday, November 27, 2020, with Bloomberg Television.

While pointing out that Nigeria’s senate approved the borrowing plan from the World Bank in June, Ahmed said the board of the multilateral institution will discuss the loan package at their next meeting.

What you should know

It can be recalled that the World Bank loan which had been sought by Nigeria in the wake of the devastating impact of the coronavirus pandemic, was being delayed by the Brettonwood institution due to concerns over reforms as it feels that Nigeria has not shown enough commitment towards achieving them.

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Some of the reforms include the unification and flexibility of the exchange rate, removal of fuel subsidy, increase in electricity tariffs amongst others.

However, it seems that with the recent deregulation of the downstream sector of the oil industry with the attendant removal of fuel subsidy and increase in electricity tariff, some of those concerns of the World Bank are gradually being sorted out.

Ahmed also said that Nigeria is considering joining the G-20 debt-relief initiative and is talking to commercial lenders to secure their backing.

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She said, “We will consider joining as long as it is safe for us to do so. Nigeria couldn’t participate initially because some of the conditions were unfavourable for existing loan commitments with bilateral lenders and other international borrowings.”

On the increased gap between the official rate and parallel market rate, the minister said the government is concerned about the widening gap in the naira’s exchange rate on the official and parallel markets.

She said, “We have been taking measures to close the gap. We hope to get to an even level very soon so the impact of the exchange rate will become moderated.”

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